Yield on T-Bill Hits 4% as Bonds Sell-off Persists

Yield on T-Bill Hits 4% as Bonds Sell-off Persists

Average yield on Nigerian Treasury Bill (T-Bill) made an upswing to 4% on Thursday as bonds sell-off persist in the fixed income market.

Treasury bills market bearish trade spurred by higher yields across the intermediate segment, Greenwich Merchant Bank said in a report.

The bearish sentiment lifted average yield by 14 basis points day on day despite the flattish close in the fixed income market. Meanwhile, activities in the money market also witnessed some sort of stress, though the financial system liquidity improved slightly to N176bn, from N96bn yesterday

Despite this, funding pressure remained unabated with the Open Buy Back and Over Night rates logging at 15.5% and 15.8% respectively. This represents an upward re-rating when compare with 13.5% and 14.0% logged yesterday.

“We expect funding pressures to continue owing mostly to the absence of any major inflow”, analysts at Chapel Hill Denham stated in a commentary. 

Elsewhere, Greenwich explained the average open market operations (OMO) yield dipped by 2 basis points bps to 6.6%.

This was mostly supported by pockets of demand at the mid-end of the fixed income securities market. In addition, bearish sentiment was sustained in the Bond market as yields rose 10 basis points to an average of 9.7%.

Across the curve, trades settled bearish as yields on the long end (+15bps), the short end (+8bps) and belly of the curve (+7bps) were elevated. The cold trade session saw the 24-JUL-2045 instrument sold off the most (+71bps).

At the Parallel foreign exchange (FX) market, the Naira remained at N486.00/USD while the currency on the Investors and Exporters Window (IEW) reversed gains by N1.00/USD to trade at N409.75/ USD from N408.75/USD.

Stock Market Gains N108.5 Billion

The Nigerian stock market gains N108.5 billion on Thursday as Investors sentiment improved following financial year 2020 earnings releases.

Today, the domestic equities market maintained positive momentum as the All-Share Index rose 53 basis points bps to 39,293.14 points. The gain was however driven on buying interest in STANBIC (+9.2%), MTNN (+1.2%), and GUARANTY (+0.5%).

Then, year to date loss improved to -2.4% and investors gained ₦108.5 billion, thus pushed market capitalisation to ₦20.6 trillion. Trading activity waned as volume and value declined 36.6% and 33.7% respectively to 229.4m units and ₦3.8 billion.

The most traded stocks by volume were UBN (79.6m units), GUARANTY (19.3m units), and ZENITH (12.1m units). Meanwhile MTNN (₦1.6 billion), GUARANTY (₦599.0 million) and ZENITH (₦421.7 million) led by value.

Afrinvest said performance across sectors under its coverage was bullish as 4 indicators trended northward. The Insurance index led the gainers, up 0.8% due to price appreciation in WAPIC (+10.0%) and AFRINSURE (+5.0%).

Similarly, the Banking and AFR-ICT indices rose 0.6% apiece on account of buying interest in STANBIC (+9.2%), GUARANTY (+0.5%) and MTNN (+1.2%).

It was noted that gains in WAPCO (+1.2%) drove the Industrial Goods index up by 7 basis points.

On the flip side, sell-offs in OANDO (-0.6%) and DANGSUGAR (-2.7%) dragged the Oil & Gas and Consumer Goods indices lower by 5bps and 24bps respectively.

Investor sentiment, as measured by market breadth, strengthened to 1.9x from the 1.3x recorded previously as 23 stocks gained against 12 decliners.

WAPIC (+10.0%), UPDCREIT (+9.8%) and PHARMDEKO (+9.6%) were the top gainers while SOVRENINS (-8.3%), NPFMCRFBK (-7.2%) and PRESTIGE (-6.8%) were the top decliners.

“In the subsequent trading session, we anticipate profit-taking in the bourse”, Afrinvest said.

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Yield on T-Bill Hits 4% as Bonds Sell-off Persists